EuroCham: Viet Nam is on the list of European investors

Sharing with The World & Vietnam Report, Chairman of the European Chamber of Commerce in Viet Nam (EuroCham) Alain Cany said that, the EVFTA will open a new wave of investment from the EU into Viet Nam.
Viet Nam is on the list of European investors
Chairman of the European Chamber of Commerce in Viet Nam Alain Cany

In the first quarter of 2021, Viet Nam's economy was estimated to increase by 4.48% over the previous year. How do you evaluate this result?

GDP growth of almost 4.5 percent in the last quarter is a remarkable achievement. In 2020, Viet Nam was one of just three countries in the region not to see a slump in economic output.

This is thanks to the government’s swift and effective handling of COVID-19, which has cast a cloud over global trade and investment ever since the first outbreak of the pandemic.

Viet Nam is now reaping the rewards of the government’s firm public health measures and sound economic management. In safeguarding both lives and livelihoods, Viet Nam has created a business environment more open than elsewhere in the region. Strong economic growth in the last three months is a testament to the success of this approach and suggests that both domestic and foreign enterprises can be confident about Viet Nam’s economic prospects in 2021.

Of course, challenges still remain. Despite the positive overall picture, some sectors and industries - such as aviation and tourism - continue to be hit hard. This was an inevitable consequence of the international travel restrictions which were essential to contain the spread of the virus.

However, now vaccine roll-outs are accelerating both here and in major inbound tourist markets, we hope that these sectors can start to recover and once again contribute to Viet Nam’s economic growth and development. This will not just help companies in the tourism sector. It will also have a ripple effect on other industries which depend on international travel, as well as easing the access of foreign technicians and experts on whom a lot of multinational enterprises depend.

How do you predict the investment situation of the EU in Viet Nam in 2021? In your opinion, what are the highlights in the picture of investment from Viet Nam to the EU in the coming time?

Viet Nam has long been an attractive destination for European investors. Part of this can be attributed to strong fundamentals: Viet Nam’s fast-growing consumer market; strategic location; growing international integration; and its well-educated, competitive labour force.

However, the last 12 months have reaffirmed that Viet Nam is a safe, secure, and prosperous market in which to invest. The government’s assured handling of COVID-19, combined with the successful implementation of new trade deals such as the EU-Viet Nam Free Trade Agreement (EVFTA), have combined to put Viet Nam on the radar of European investors.

This can be seen in EuroCham’s most recent Business Climate Index. This found that 30 percent of business leaders anticipated increasing their investment in quarter 1 of 2021, with a further 56 percent predicting that their investment would remain at the same level. This shows that European business leaders are optimistic about Viet Nam’s trade and investment environment and positive about the prospects of their own enterprises.

Despite Viet Nam is one of the international success stories of 2020, COVID-19 continues to disrupt global trade and investment. Therefore, much depends on how the rest of the world handles the pandemic. The EU is rolling out vaccines but some of our member states continue to struggle with the impact of the virus on their business operations.

Even so, Viet Nam now has privileged access to the EU market through the EVFTA. It should grasp the opportunities of this agreement to build new commercial relationships with EU partners and to establish their brands with EU consumers, who make up a huge market of around 450 million people.

Viet Nam is on the list of European investors

The EVFTA will open a new wave of investment from the EU into Viet Nam

The governments of Viet Nam and EU, and EuroCham have made great efforts, but European investment in Viet Nam is still low. In your opinion, will EVFTA change the picture of European investment in Viet Nam?

Europe remains one of Viet Nam’s most important trade and investment partners. The EU has had more than two thousand foreign-invested projects in all 18 economic sectors and in 52 out of 63 provinces. While the EU is not Viet Nam’s largest source of FDI, companies from the EU bring high-quality, long-term investment. The EU is a reliable partner for Viet Nam’s socio-economic development: Many of our member companies have been here for decades and invested not just capital in their business operations but also in up-skilling their workforces and contributing to their communities.

Now it has entered into force, the EVFTA should help to unlock a new wave of investment from the EU to Viet Nam. But the success of this historic agreement should be measured over time, not overnight. This is because the agreement has a decade-long implementation period. Around two-thirds of tariff lines on EU, exports were eliminated the moment the EVFTA entered into force on 1 August 2020.

However, the remaining tariff lines - up to 99 percent - will be phased out over a longer period. This will be up to a decade for more sensitive items. Once the implementation period is complete, European goods will be more competitive in Viet Nam’s fast-growing consumer market. Meanwhile, our companies will be able to trade on equal terms with those from countries with which Viet Nam has a free trade agreement in places such as South Korea, India, and Japan.

European investment will receive an additional boost once the EU-Viet Nam Investment Protection Agreement (EVIPA) enters into force. Unlike free trade agreements, which can be signed and ratified at the level of the European Commission and Parliament, investment protection agreements must still be ratified in each of the 27 EU member states. The EVIPA is going through this process now, and once it is implemented it should help to boost EU investment in Viet Nam still further.

In general, the EVIPA will increase the confidence of EU investors when doing business in Viet Nam. For instance, the agreement introduces an innovative dispute-resolution mechanism as well as a permanent, independent ‘Tribunal’ to adjudicate when mediation fails.

In the EVIPA, Viet Nam has also agreed to adopt international standards on issues such as trademarks and patents. This will protect investors and their investments, giving them greater confidence to do business here.

What should Viet Nam and the EU do to take advantage of the "golden opportunity" from EVFTA to change the picture of investment from the EU into Viet Nam?

The EVFTA is now in force, but this does not mean our work is finished. The challenge now is to ensure a smooth and successful implementation of both the EVFTA and the EVIPA. In other words, we need to ensure that the provisions agreed to in principle are now realized in practice, so that our companies and consumers can benefit from lower tariffs and greater market access. This requires leaders and business communities on both sides to work together and address the inevitable issues which will arise.

We have made a promising start. Last October, EuroCham established the EU-Viet Nam Business Council (EVBC) with our partners at VCCI. This Council will connect our respective member companies, giving them a common platform with which to raise issues and a practical tool with which to resolve them.

Then, in January, EuroCham spoke to the European Parliament’s International Trade Committee in Brussels, where we were pleased to share a positive progress report with MEPs on the first six months of implementation.

EuroCham is committed to making the EVFTA a success and encouraging more EU investment into Viet Nam. Our member companies will continue to share their insights with the government, not least through our annual Whitebook report, to help create an even more open, competitive, and attractive trade and investment environment for European companies in Viet Nam.

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